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Rinnai: The confusion and chaos of the UK’s energy direction

Rinnai’s Chris Goggin examines the current state of UK domestic energy policy that focuses on the implementation of clean energy dispersal. As the UK phases out fossil fuels for renewable alternatives, a considerable amount of work must be completed for the UK to become carbon neutral. Chris gives a brief overview of the indecision, chaos, and confusion that the UK energy market finds itself in.

Chris Goggin, Director of Operations
Rinnai UK Limited

UK energy policy is currently convoluted and chaotic, with apparent scant insight into the future pathway and direction provided to customers and energy industry professionals alike. At present, the UK relies on fossil fuels for national energy resources with a future aim of transitioning to significant carbon reducing alternatives. These reductions are targets, written into law. The government of the day is expected to observe its own laws.

As the UK moves away from oil and gas, cleaner energies such as solar, wind and lower carbon gases will become more available and commonplace inside the UK energy market. So, what role will these alternative energies play in a future UK domestic energy mix?

Solar, wind, and greener gasses like hydrogen or renewable DME are likely to play significant roles in delivering power to UK housing and building stock once natural gas usage is nullified. For this to happen, a concise strategy must deliver infrastructure and installations capable of transporting clean energy into UK properties.

To begin, UK decarbonisation plans and commitments have been diluted, preferring instead to expand and increase North Sea oil and gas production. The Times newspaper recently published an article that quoted the UK’s largest insurance provider, Aviva, as saying “the government increasingly focuses on short-term energy security over long-term sustainability”.

As European and American big business has embraced large renewable projects, UK political indecision and rising global energy costs has led to a lack of investment within large scale UK renewable projects. Also published in the Times article referenced above, Aviva believes that “the recent dilution in government net zero targets is an even bigger challenge and creates uncertainty”.

The Energy Transition Readiness Index 2023 is a measurement of a region’s ability to transition towards Net Zero. A report is compiled for potential investors to evaluate a country’s viability towards profiteering from renewable electricity. The latest report believes that investors will only be attracted towards UK projects if they can observe clear and succinct governance as well as regulatory stability. Presently there is not enough evidence of either to entice outside capital investment.

Installer, specifiers and consultants of heating and hot water products must absorb centralised information to devise a strategy. Presently, the flow of governmental information can be contradicting and even bipartisan. For a UK national energy transition to be successfully implemented, the information and agendas must be clear and consistent.

Without this required synchronicity, all those in the supply chain risk appearing uninformed, especially in view of constant misinformation from a variety of questioning sources and bodies. The industry needs a unified approach which delivers clean, sustainable and renewable energies with all associated appliances and systems.

Hydrogen is an example of the confusion that travels throughout the UK energy sector. Two recent reports have been released claiming a contradicting outcome regarding the future of the UK national gas transmission network. The Future of Great Britain’s Gas Networks Report, by the National Infrastructure Commission and Ofgem, says that the national gas network should be decommissioned in favour of widespread electrification.

An additional report funded by UK gas operator Cadent and conducted by The Imperial College of London has stated that a switch to hydrogen as domestic and commercial fuel could save the British taxpayer up to £5 billion a year when compared to widespread electrification.

One of the UK’s biggest names in energy is preparing for a future with hydrogen – this is the UK’s main supplier of property heat and believes a switch to hydrogen is probable. Its website informs all readers of a likely timeframe in which hydrogen will be introduced. If the UK does switch to hydrogen, the current gas infrastructure will be retrofitted to transport hydrogen gas mixes and eventually 100% pure hydrogen.

Offshore wind is a further area of the energy industry that is encountering problems. Despite government subsidies being made available, major renewable firms are beginning to question the viability of huge UK offshore wind projects.

Furthermore, it was widely reported in September that the CFD (Contracts for Difference) scheme failed to attract any bids whatsoever. Although the CFD scheme offered subsidies to foreign investors, European, American, and Asian alternative investment opportunities are currently more attractive.

At the time of writing, The Guardian published a story stating that the UK government is aiming to raise subsidies by two-thirds and the starting price by 50% to attract financial investment in the next round of offshore wind auctions.

Major energy companies that specialise in offshore wind have now either raised financial concerns or have pulled out of planned large UK projects. Danish multinational energy organization Orsted has publicly voiced doubts on the financial viability of its Hornsea 3 wind project off the coast of Yorkshire. A final decision on proceeding to a third stage of project advancement is pending.

Swedish wind company Vattenfall has stopped work on a huge wind farm being constructed off the coast of Norfolk. Both Orsted and Vattenfall have cited rising inflationary international market costs and inadequate government subsidies as influencing factors in each respective decision.

Solar energy appears to be the least turbulent and contested area of energy adoption. Solar is well placed to play a significant role in future UK power provision. If wider electrification is embraced, solar will contribute by way of delivering a source of generational power.

However, due to the uncertain state of UK energy policy any move towards solar will be in the future. The main issue regarding present solar power is a long wait for grid connectivity. Some businesses and domestic customers have been told that they must wait between 10 and 15 years for access to the UK grid. A lack of infrastructure and a queuing system for grid applications are contributing factors in this long wait.

UK energy policy is far behind other economies such as Germany, France, and the Netherlands, let alone Europe as a block and the USA. The UK energy industry lacks infrastructure, financial subsidies or firm decision-making direction and therefore cannot uphold certain decarbonising ambitions as a result. When all of the above elements are combined, the UK falls short in offering decent international investment opportunities.

Contractors, specifiers, system designers and installers of home heating and hot water systems should consider companies who offer a range of decarbonising products that ensure low customer costs and efficient performance. Rinnai’s H3 range covers all low carbon needs such as solar, hydrogen and heat pump technologies.

Rinnai believes in providing consistent and transparent updates on domestic and global energy issues that could affect UK decarbonising product options and costs. Rinnai aim to supply UK customers with information that assists investment making decisions on future clean energy heating and hot water systems.

To keep up to speed with the changing face of UK energy policy, visit www.rinnaiuk.com or head to stand 5C26 at InstallerSHOW.

Register for your free ticket here.

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